To facilitate the transfer of funds and to make it technologically viable, the
Reserve Bank of India (“RBI”) has taken a number of steps to make payments faster, which is why
it is the first payment wallet license or paid wallet license. The different types of payment
fund license are:
There are the following organizations that are eligible to receive a license for prepaid wallets. They have to comply with the following requirements:
These institutions have to get previous permission from the Reserve Bank of India (RBI) for getting the license.
Those newly formed firms that do not have an audited financial statement must receive a certified Chartered Accountant certificate declaring their current net worth and have to file a provisional balance sheet.
As specified by the FDI policy guidelines, these companies must have minimum capital.
must, in conjunction with their most recent audited balance sheet, have a minimum net worth of INR 25 Crore.
A private or public company incorporated under the Companies Act 2013 or 1956 can only do this prepaid wallet issuing business if it is approved in the MOA by its object clause.
The RBI has categorized Prepaid or Payment Wallets into four categories:
It is a fund issued by a company to a consumer to purchase goods and services only from
that company. Example: Amazon, Cleartrip, etc.
You can use this:
It is used to purchase goods and services and also allows for ATM withdrawals. Example –
Visa card, Master Card, Rupay card.
You can use this :
Slightly closed funds refer to those funds that can be used to purchase goods and/or
services such as that fund as a payment tool that can be used by a clearly identified merchant who
makes a direct agreement with the issuer without a payment instrument. Example- Paytm, Mobikwik,
You can use it :
Any other documentation that may be relevant.
Business incorporation under the Company Act, 2013 with key objects consistent with that of a prepaid payment instrument.
Preparation and filing of the Payment Wallet License Application in Form A with payment of an appropriate fee as needed by the Regulations of the Payment and Settlement System, 2008.
In order to ensure the correctness of the application and the attachments submitted and the fitness of the Company and its promoters and directors, the application thus filed is subject to the initial review of the application by the RBI.
The designated office of the Reserve Bank of India issues an ‘in-principle’ approval valid for 6 months subject to completion of the initial scrutiny to the satisfaction of the RBI.
A Systems Audit Report shall be mandatory to be submitted to RBI by the organization receiving the ‘in-principle’ within those six months, otherwise, the in-principle approval shall be considered to have expired after 6 months. There is a provision for such an applicant to seek a one-time extension of six months, which is to be accepted only if there is a legitimate explanation for the delays incurred. Based on the reasons mentioned, the RBI has the discretion to approve or reject such extension requests.
If the RBI finds that the particulars and facts presented by the applicant in the application are sufficient and, following the respective provisions. The RBI shall issue the Registration Certificate to the applicant within six months of its initial approval. However, in the absence of a certificate of registration, the in-principle approval shall expire at the end of the six months. The registration certificate issued by the RBI is valid for 5 years and is subject to periodic examination.
If a certificate of authorization for the issuance of prepaid payment instruments has
been approved by a non-banking entity, the written penalty of the RBI must be acknowledged under the
The value of money raised by licensing a paid fund remains high. Moreover, its benefits
are also much faster compared to other methods. In addition, the interest and trust of people who work
in a prepaid fund increase automatically if the payment is straightforward and timely.
To ensure that payments are made on time, the way investors need to invest the money collected is:
In India, under the 2017 Policy Guidelines on the Issuance and Service of Prepaid
Payment Instruments, Apex Bank has laid down detailed guidance on the \ issuance of PPIs. It is
possible, to sum up, the guidelines issued as:
In India, businesses are exempt from obtaining a licensed fund paid as follows:
All organizations involved in issuing closed system PPIs are exempt from the RBI’s
guidelines and will not seek approval from Apex Bank. However, they need to meet the
following conditions for the issuance of payment metals:
All entities authorized under the FEMA (Foreign Exchange Management Act), 1999 to issue prepaid foreign currencies are not subject to minimum monetary requirements. However, these payment instruments can only be used for the current account approval.
The conditions to be met for the release of prepaid steel from RBI guidelines
are as follows:
LegalRaasta was founded on the principle that sophisticated legal and taxation services should be simple, modern, and inexpensive. We can serve our clients more efficiently thanks to cutting-edge practise technology.